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Corixa, once considered one of Seattle’s most promising biotech companies of the past 10 years, has agreed to be acquired for $300 million in cash and assumption of about $100 million in debt by its longtime corporate partner, the pharmaceutical giant GlaxoSmithKline.

The decision to sell comes at a painful point in Corixa history. The cancer drug that it nurtured for years, Bexxar, flopped in its first year on the market. It endured two major layoffs in the past two years and scrapped its cancer-research programs to save cash. It accumulated losses of more than $1.2 billion and never veered toward the black. Its stock had fallen from an all-time high of slightly more than $69 five years ago to $3.09 yesterday.

In the end, Corixa shareholders are expected to receive $4.40 a share in cash from GlaxoSmithKline, a 42 percent premium over yesterday’s close. Glaxo will also assume Corixa’s outstanding convertible notes, a liability of about $100 million. The deal, after receiving clearance from regulators and shareholders, is expected to be finalized in the third quarter.

But a prepared statement from Corixa CEO Steve Gillis left unclear what will happen to Corixa’s 220 employees or its new laboratories in the 9th and Stewart Life Sciences Building in Seattle.

He said executives would be “assisting with continued expansion of manufacturing operations in Montana, and … helping GSK [Glaxo] to evaluate the other programs in the Corixa portfolio.”

GlaxoSmithKline is acquiring rights to immune-system-boosting compounds it currently uses under a partnership with Corixa to make its vaccines more effective. It gets the manufacturing plant in Hamilton, Mont., that makes the strategically important MPL vaccine-boosting compounds and will no longer owe millions in royalties to Corixa on future sales of the vaccines.

Corixa

Founded: 1994

Location: Seattle and Hamilton, Mont.

Employees: 220

What it does: Develops immune-system-based treatments and vaccines. Manufactures compounds to boost the effectiveness of vaccines.

GlaxoSmithKline

Location: London headquarters, operations in 117 countries

Employees: 99,837

Develops and sells prescription drugs and vaccines. Paxil for depression, Zantac for heartburn and flu vaccines are some of its better-known products.

“MPL in particular is an important component in many of our most-promising vaccines under development,” said Jean Stephenne, president of GSK Biologicals.

For Corixa, with no major drug revenues coming in, the sale means it no longer faces the problem of more than $100 million of convertible debt that comes due in 2008. It will no longer have to struggle to raise capital during another painful down cycle for biotech stocks.

Financially, the company — which went public in late 1997 — had a painful 2004. It expected to sell about $20 million of Bexxar in its first year. Partly because the targeted lymphoma drug was complicated to administer and difficult to coordinate with physicians, it sold only $7.2 million its first four full quarters on the market. After transferring the drug to GlaxoSmithKline, the company expected to tally a net loss of $35 million to $45 million this year.

CEO Gillis, a scientific co-founder of Seattle-based Immunex and a prominent figure in the biotech industry, was not available for comment yesterday afternoon. Robert Hershberg, chief medical officer of Dendreon and a former Corixa scientist, said the company’s legacy will be as a place that discovered many biological markers of cancer, developed an intriguing new vaccine candidate for tuberculosis and employed and trained some exceptional scientists.

“A lot of things in this business are out of people’s control,” Hershberg said.

Alan Frazier, managing partner of Frazier Healthcare Ventures in Seattle and a former Gillis colleague at Immunex, said Corixa faced difficult prospects for recovery because it didn’t have what investors are looking for: drug candidates in late stages of testing.

“The public markets are tough and unforgiving for people who have stumbled,” he said.

Frazier said he’s hopeful that GlaxoSmithKline will try to retain Gillis and build a West Coast research center around him in Seattle. Another top pharmaceutical company, Merck, did that when it bought Rosetta Inpharmatics in 2001 and kept the acquired company’s leader, Stephen Friend.